CITY OF SIMI VALLEY
MEMORANDUM
August 22, 2022
TO: City Council
FROM: Office of the City Manager
SUBJECT: CONSIDERATION OF CLAIMING $3.7 MILLION OF AMERICAN RESCUE
PLAN ACT FUNDS AS REVENUE LOSS
STAFF RECOMMENDATION
It is recommended the City Council approve the City claiming an additional $3,748,976 in American Rescue Plan Act funds as revenue loss and transfer these funds to the General Fund.
BACKGROUND AND OVERVIEW
The American Rescue Plan Act (ARPA) allocated $15,325,2 94 to the City of Simi Valley. The ARPA has specific categories and uses for utilization of the funds, in addition to offsetting revenue losses that may have been encountered by the City as a result of the COVID-19 pandemic. On May 9, 2022, the City Council approved the distribution of the ARPA funds to various projects in compliance with the ARPA Final Rule.
The ARPA Final Rule allows cities to claim ARPA funds to offset revenue losses; which funds are then transferred to the city’s general fund and used for various purposes. The City has already claimed $10 million as a standard deduction. Based on recent fiscal calculations, the City is now able to claim an additional $3.7 million.
Staff recommends the C ity Council approve claiming $3.7 million in ARPA funds for distribution to previously identified projects.
FINDINGS AND ALTERNATIVES
The Final Rule for use of ARPA funds established by the T reasury Department provides for cities to claim $10 million as a “standard deduction” of revenue loss due to the COVID- 19 pandemic. In claiming the $10 million, the City Council allocated these funds to the City’s General Fund for use on Streets and Roads projects. ARPA funds claimed for revenue loss, and subsequen tly transferred to t he General F und, are not required to follow the extensive reporting requirements similar to those mandated by t he use of
AGENDA ITEM NO.
Consent (3)
2 Federal Funds. This allows non-profits receiving revenue loss ARPA funds from the City to be relieved of burdensome and extensive Federal audit and reporting requirements.
As noted above, the City received $15,325,294 in ARPA funding. Revenue losses related to the pandemic, as calculated by the Treasury guidance for calendar years ended 2020 through 2023, can be claimed as such and transferred to the General Fund for further distribution per City Council direction. City auditors have provided approval of staff’s loss calculation for calendar year 2020 and 2021 , and determined that the City can claim $13,748,976 in ARPA funds. Because the City has already claimed $10 million, the remaining $3,748,976 can now be claimed and transferred to the General Fund for distribution to City approved ARPA projects.
Staff is not recommending any changes to the City Council approved May 9, 2022 distribution of ARPA funds. By claiming the $3 .7 million, staff will distribute these revenue loss funds to the non-profits identified to receive ARPA funds (i.e. Samaritan Center, Free Clinic, Interface, etc.), relieving them of the burdensome Federal reporting requirements. The remaining $1,576,318 in non-revenue loss ARPA funds still must comply with Federal reporting and auditing requirements unless they can later be claimed as revenue loss.
The following alternatives are available to the City Council:
1. Approve the City claiming $3. 7 million in ARPA funds as additional revenue loss due to the COVID-19 pandemic;
2. Not approve the City claiming $3. 7 million in ARPA funds as additional revenue loss due to the COVID-19 pandemic;
3. Provide staff with further direction.
Staff recommends Alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I move to approve the City claiming an additional $3,748,976 in American Rescue Plan Act funds as revenue loss and transfer these funds to the General Fund.
SUMMARY
The City received $15,325,294 in ARPA funding. The Final Rule for use of ARPA funds established by the Treasury Department provides for cities to claim $10 million as a “standard deduction” of revenue loss due to the COVID-19 pandemic. Staff has provided calculations for calendar year 2020 and 2021 and the City’s auditors have approved the City’s total revenue loss due to the COVID -19 pandemic and determined that the City can claim $13,748,976 in ARPA funds. Because the City has already claimed $10 million, 3 the remaining $3,748,976 can now be claimed and transferred to the General Fund for distribution to City approved ARPA projects. By claiming the $3 .7 million, staff will distribute these revenue loss funds to the non-profits identified to receive ARPA funds (i.e. Samaritan Center, Free Clinic, Interface, etc.), relieving them of the burdensome Federal reporting requirements. Staff recommends the City Council approve the City claiming $3. 7 million in ARPA funds as additional revenue loss due to the COVID-19 pandemic.
____________________________________
Brian P. Gabler
City Manager